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AMCON Injects N1.5bn into Ailing Arik Air

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  • AMCON Injects N1.5bn into Ailing Arik Air

The Asset Management Corporation of Nigeria (AMCON) has injected a total of N1.5 billion into Arik Air since it took over the distressed airline in February 2017.

The Chief Executive Officer of Arik Air, Captain Roy Ilegbodu, who disclosed this during an interactive session on the activities at Arik, two months after the new management team was appointed by AMCON, commended the corporation for its support.

“AMCON indeed has been very supportive with funds and that is why we are still here today. I would say that in the first couple of weeks that we took over, AMCON injected approximately N1.5 billion. Basically, that has sustained us comfortably,” he explained, while responding to questions by journalists.

Ilegbodu added: “A lot of people think that in three or four months, you can turn around an airline. But it doesn’t work so in this business. Everything is well guided because you have to make sure all the parts of the business are in order. Everything is done systematically and AMCON has supported us very well. We have been able to source spare parts and as I speak, we have spare parts arriving on daily basis.

“So, we have managed to stabilise operations and the unpaid staff have been paid salaries and we are up to date on that. A lot of the expatriates also, we have paid them up to date. As of today, we operate a fleet of about eight aircraft, but by mid-May, we would have 14 airplanes in service and we are going to maintain that number for a while.

“We don’t want to grow the operations so rapidly because it has its own setback. Our passenger number has gone up considerably and on Friday alone we lifted over 3,000 passengers. But decision has to be made on how to proceed in the future.”

According to him, a lot of the aircraft his team met on ground were “cannibalised.” This, he said, meant that what the previous management was doing was that they used spare parts from those airplanes on ground that were not functional to keep the few flying operational, which he alleged degraded the status of all the planes on ground, saying it wasn’t in line with best practice.

Ilegbodu further explained that in the last two months when his team took over operation at Arik, they have tried to regain control and slowed things down deliberately because the industry is one where safety is very critical.

“When we took over in February, we looked at what was on ground at Arik. What we met was quite interesting and disturbing also. For an airline that had about 30 aircraft on its book, they were only about 10 of them that were functional. So, one would say that AMCON’s intervention was very timely. If you look at some of the things that are on ground, you can easily deduce that the company would have folded up in a couple of months.

“Then, they were no spare parts in the stores to support the operations and you could see slow attrition in terms of aircraft fleets. They were huge bills left unpaid when we came on board which we have tried to address. This business is mainly driven by credit and a lot of people offer credit based on trust.

“So, once you start to bridge that trust, then you lose those credit facilities. Arik had reached that stage where a lot of creditors were refusing to do business on credit. Then, a lot of flights were being delayed and customer confidence dropped significantly.

“Also, by the time we started looking at the financial records, in addition to what AMCON was being owed, we noticed that they were also exposed to third party creditors. Based on that, KPMG was called in to carry out a thorough audit of its books and that process is ongoing. More revelations keep coming up daily,” he said.

Also responding to a question about talks between the federal government and some private investors on two of the airlines that had been taken over by AMCON, he said investors should be sought to help reposition the company.

He said the airline would not be in a hurry to resume international flights for now until it sorts out a lot of its debt issues.

According to the Arik Air boss, the airline still owes a group called Europe Controls about €1 million, and other international creditors that must be sorted out before it resumes international flights.

Ilegbodu however pointed out that the KPMG audit would actually give a true position of where Arik is and would enable the government to decide on what to do going forward.

However, an aviation industry expert on Tuesday decried AMCON’s continuing efforts to de-market the airline and give its former management a bad name in order to justify its takeover of the airline.

He also described the amount injected into the airline as paltry relative to its size and needs.

He said Ilegbodu was being insincere when he said Arik has no spare parts, stressing that its former management left behind spare parts valued at $150 million.

“The AMCON imposed management has been economical with the truth about so many things. Spare parts left behind by the management that the corporation removed was valued at $150 million.

“Besides, what will the paltry injection of N1.5 billion do for an airline that has been valued at $3.2 billion by Lloyd’s of London? That is like a drop in the ocean and will not make any difference.

“Also, prior to Arik’s takeover, it was flying on average 8,000 passengers a day, but that has dropped to 2,400 passengers a day all because of AMCON’s interference, so how is the airline faring better today?” he asked.

The aviation expert, who preferred not to be named, also defended the old management of the airline, saying Arik’s indebtedness had been grossly exaggerated, stressing that Arik owes AMCON N175 billion.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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AB InBev Opens Applications For Beer Garage Africa Innovation Challenge

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The world’s largest beer company, AB InBev, has partnered with Hindsight Ventures to launch the Beer Garage Africa Innovation Challenge, which will offer startups access to venture development and grant funding.

AB InBev, which has over 500 brands and over six million B2B customers in over 100 countries, launched Beer Garage a few years ago with the objective of driving innovation by building a strong community of ecosystem stakeholders.

As part of this initiative, AB InBev is now launching the Beer Garage Africa Innovation Challenge, a pan-African challenge to identify hi-tech, high potential startups and founders building innovative solutions across Africa.

To do so, it has partnered with Startup Réseau, an India-headquartered global startup accelerator, which will operate the programme through its Africa-focused vertical Hindsight Ventures.

Ten startups will be selected to take part in a Global Venture Bootcamp, a three-week venture mentorship and leadership development programme that will be delivered by successful founders, industry leaders, domain experts and investors. The Beer Garage Africa Innovation Challenge will culminate with a demo day, which will be attended by AB InBev’s global leadership as well as Hindsight Ventures’ global investor pool. On the demo day, one African startup will stand to win US$5,000 in grant capital. All selected startups get access to US$150,000 in technology credits from partners.

“We are really excited by this partnership, which allows us to drive a pan-African program. With a billion people in the continent, over 300 million new internet users expected to come online over the next three years, a fast-growing mobile internet penetration – and now, with global venture capital money making its way to African entrepreneurs, this is a great opportunity for startups to engage with AB InBev as a partner of choice,” said Ajay Ramasubramaniam, founder and chief executive officer (CEO) of Startup Réseau.

Pritam Dutta, global director for fintech ventures and innovation at AB InBev, said the Beer Garage Africa Challenge was an opportunity to leverage the emerging tech startup ecosystem and funnel novel ideas into AB InBev.

“We set out to build out a stronger connect into the Africa ecosystem, find disruptive startups which could be a great pipeline for our future disruptive innovations and further accelerate our innovation agenda, delivering strong business impact,” he said.

Applications for the challenge are now open here.

Beer Garage is one of the global innovation hubs at AB InBev with the objective of driving innovation by building a strong community of ecosystem stakeholders.

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Merger and Acquisition

Sub Saharan Africa Mergers and Acquisition Transactions Totalled US$ 78.3 Billion During First Nine Months of 2021

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Refinitiv today released the Sub-Saharan African investment banking analysis for the first nine months of 2021. According to the report, an estimated US$387.5 million worth of investment banking fees were generated in Sub-Saharan Africa during the first nine months of 2021, a 15% increase from the same period in 2020. 

While debt capital markets underwriting fees increased 148% to US$117.8 million, the highest year-to-date period since our records began in 2000, fees from equity capital markets underwriting, M&A advisory and syndicated lending all declined from the first nine months of 2020.  Equity fees declined 17% to US$50.7 million, while syndicated lending fees declined 4% to US$148.2 million. Advisory fees earned in the region from completed M&A transactions reached US$70.8 million, down 3% from last year to the lowest first nine-month total since 2013.  Fifty-eight percent of all Sub-Saharan African fees were generated in South Africa during the first nine months of 2021, and 23% were earned from deals in the financial sector. Standard Chartered earned the most investment banking fees in the region during the first nine months of 2021, a total of US$33.1 million or an 8.5% share of the total fee pool.

MERGERS & ACQUISITIONS

Boosted by the US$44.1 billion Naspers/Prosus share swap in May, the value of announced M&A transactions with any Sub-Saharan African involvement reached US$78.3 billion during the first nine months of 2021, more than four-times the value recorded during the same period last year and the highest first nine-month total since our records began in 1980.  The number of deals increased 4% from last year to a three-year high of 584.

M&A involving a Sub-Saharan African target reached US$61.8 billion, again lifted by the share swap to an all-time record first nine-month total, while the number of deals increased 8% over last year.  Inbound deals, involving an acquiror outside of Sub-Saharan Africa, increased 86% to US$9.6 billion, while Sub-Saharan African outbound M&A more than doubled to US$11.5 billion. With advisory work on deals worth a combined U$52.1 billion, Morgan Stanley held the top spot in the financial advisor ranking for deals with any Sub-Saharan African involvement during the first nine months of 2021.

EQUITY CAPITAL MARKETS

Sub-Saharan African equity and equity-related issuance reached US$971.2 million during the third quarter of 2021, the highest quarterly total in more than two years.  Despite the strong third quarter, total proceeds raised during the first nine months of 2021 was down 42% from last year at US$1.2 billion, the lowest first nine-month total since 2005.   Pepkor Holdings, Lighthouse Capital and retail pharmacy chain Dis-Chem Pharmacies were among those in the region raising new equity funds from follow-on offerings during the third quarter.  There have been no initial public offerings in the region so far during 2021. Investec and Goldman Sachs share first place in the Sub-Saharan African ECM underwriting league table during the first nine months of 2021. 

DEBT CAPITAL MARKETS

Sub-Saharan African debt issuance totalled US$37.2 billion during the first nine months of 2021, up 149% from the value recorded during the same period in 2020 and the highest first nine-month total since our records began in 1980.  The number of issues increased 33% over the same period.  US$15.2 billion worth of the bond proceeds were raised during the third quarter alone, with both Prosus and the Federal Government of Nigeria raising US$4.0 billion.  Government & Agency issuance accounted for 55% of proceeds raised during the first nine months of 2021, while the financial sector accounted for 24%. Citi took the top spot in the Sub-Saharan African bond book runner ranking during the first nine months of 2021, with US$6.0 billion of related proceeds, or a 16% market share.

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Merger and Acquisition

Access Bank Completes Acquisition of African Banking Corporation of Botswana Limited

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Africa’s leading bank, Access Bank Plc has now completed the acquisition of a 78.15 percent shareholding in African Banking Corporation of Botswana Limited (BancABC Botswana).

Access Bank announced in a statement signed by Sunday Ekwochi, Company Secretary, Access Bank Plc.

According to the lender, the new acquisition will form part of the Bank’s nexus for trade and payments in Southern Africa and the broader COMESA trade region.

BancABC Bostwana is the fifth-largest bank in Botswana and is a well-capitalized franchise poised for growth in its local market. The lender’s achievements in the retail banking space will provide an opportunity for the Bank to deploy its best-in-class digital platforms and product suites to the benefit of BancABC Botswana’s customers and enable it to complete strongly across its core business segments.

Commenting on the transaction, Dr. Herbert Wigwe, GMD/CEO of the Bank, “We are pleased with the successful conclusion of this transaction which will provide significant synergies by combining BancABC Botswana’s strong retail banking operation with Access Bank’s wholesale banking capabilities. It will also strengthen the quality of earnings through revenue diversification and growth in the corporate and SME banking segments for BanABC Botswana. The combination is another step towards our broader vision of becoming the world’s Most Respected African Bank.”

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